UK REIT LXi has acquired a long-let student accommodation scheme in the Scottish city of Dundee for £20 mln (€23 mln), reflecting a net initial yield of 6.3% (net of acquisition costs).
The property is fully let to Mears Group, a provider of support services to the public and private social sousing and care sectors in the UK.
The lease has an unexpired term of over 21.5 years, with no tenant break option, until 22 September 2039. The rent is reviewed annually in line with uncapped Consumer Prices Index inflation (collared at 1% per annum).
The property provides 413 beds and comprises 379 single rooms within cluster flats of two to six beds, alongside nine one-bed flats and 25 self-contained studio flats. It has undergone a refurbishment programme, which completed in September 2017.
The acquisition is being funded using the proceeds of the company's new 11.5-year loan facility secured from Scottish Widows in December 2017 at a fixed rate of 2.85% per annum.
LXi has now deployed £263 mln of equity and debt capital (excluding costs) since its IPO in February 2017 at an average net initial yield of over 6%, with an average unexpired lease term to first break of 24 years. The company said it is in solicitors' hands on further acquisitions which are expected to absorb the balance of its debt facilities.
